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Sony's cross-play deal seems a smart solution to a complex problem | Opinion

The royalty Sony and Epic agreed to open up cross-play on PlayStation has caused anger - but it's a nuanced response to the growing complexity of the industry's revenue models

It's only been a few days, but the court case between Epic and Apple has already provided a treasure trove of insider information on a host of different topics, from Fortnite's revenues, to Tim Cook's confusion over who Tim Sweeney actually was, to the extremely ill-advised nature of running formal court proceedings over poorly configured live-streaming software.

Amongst it all, though, perhaps the most interesting piece of information is the one that's generated the most heated outrage -- the reveal that Sony's reluctant decision to allow cross-play came with a price tag in the form of an additional royalty charged to cross-play games that are played disproportionately on PlayStation.

Cross-play is something of a sacred cow for a lot of gamers, and for good reason; platform holders may not be overly enthused about losing some of the word of mouth marketing they used to gain from "buy an Xbox / PlayStation so we can play this together" type conversations, but the quality of life gains for players are pretty enormous -- not least because the reality for many of them is that buying a whole different console just to be able to play something with a friend is a ridiculous and unaffordable extravagance. Discussion of cross-play policies tends to get pretty heated as a result, making it unsurprising that the idea of Sony slapping developers with an extra royalty to enable the function is not making the company into the toast of the Internet right now.

Cross-play, for all that it's great for gamers, creates a pipeline whereby the wrong company can end up profiting from the success of a game

As is often the case, though, the detail of the arrangement is a lot more nuanced and sensible than the straw-man version currently being pilloried across social media. What Sony's rule actually says isn't that cross-play games must all pay an extra royalty; rather, it's that if a situation arises where there's an F2P-style cross-play game that's being played extensively on PlayStation, but generating most of its revenue on another platform, Sony wants an extra cut to make up for the shortfall in its revenues.

This is an interesting solution to a genuine problem -- all the more interesting because it's a solution Epic was seemingly willing to go along with, and a problem that's in many ways a microcosm of the whole debate that Epic's battle with Apple has kicked up into the mainstream consciousness.

Basically, Sony provides a platform -- PlayStation -- that consists of hardware devices that are sold to users, but also a ton of software and services, from the console OS and APIs through various developer support programs all the way to user-facing services like PlayStation Network. In order to make that platform economically viable, it takes a cut of the revenue from game sales -- around 30% -- and when the game in question is a free-to-play title like Fortnite, that means a cut of the in-app purchase (IAP) sales.

Free to play games generally have various different things for players to buy, but often function by asking consumers to purchase a quantity of in-game premium currency ("V-Bucks", in the case of Fortnite) for real money, and then using that in-game currency to buy the actual things they want in the game. It's the purchase of in-game currency for real money that's of interest to a platform holder like Sony, since that's the transaction which generates its 30% cut of the game's revenues.

Cross-play opens up the ability to join friends on any platform, but how can the revenue be shared fairly when players spend on one device and play on another?

Cross-play opens up the ability to join friends on any platform, but how can the revenue be shared fairly when players spend on one device and play on another?

Here's where cross-play makes things complicated. If the game can be played across multiple platforms, with players taking a single account with them as they move between PlayStation, Xbox, PC, mobile and so on, then a situation can easily arise where a player has bought in-game currency (like V-Bucks) on one platform, but is spending it -- or rather, playing the actual game -- on another platform.

If there are no restrictions in place, there's nothing to stop a player from whipping out their phone to buy in-game currency there (perhaps there's a special offer on, or perhaps their credit card is already registered there so it's more convenient, etc.), but continuing to play the game pretty much entirely on PlayStation because they prefer the controller and the graphical quality. In that case, the mobile phone platform holder just made 30%, while Sony -- whose platform is being used to play the game, and which has committed various developer support and service resources to ensuring the game is of high quality on that platform -- doesn't see a dime. Some popular games have in-game currency top-up cards that are sold at retail, in which case it's a convenience store that's taking a cut while the platform holder doesn't get a dime.

What is to prevent Epic's store from selling discounted V-Bucks, taking more revenue even though the game's success owes itself largely to other platforms?

This is all well and good if the whole situation is a "swings and roundabouts" kind of affair -- sometimes Sony loses out, sometimes other platforms lose out, but it all essentially balances in the end -- but it's not hard to imagine a scenario where there's a consistent, ongoing mismatch between the platform where the game is most popularly played (which, going by Epic's own projections, is almost certainly PS4), and the platform where it actually sells IAP and makes money.

If you accept that platform holders have a right to earn a cut of the revenues from games that are played on their platforms (and Epic, for its part, appears to have no problem accepting that business model on consoles, if not on smartphones), then this is a genuine problem -- cross-play, for all that it's great for gamers, creates a pipeline whereby the wrong company can end up profiting from the success of a game.

That's something that gets even more problematic, at least potentially, when you consider that in the case of Fortnite, the game's operator also happens to have its own digital game store -- and thus the ability to process payments for Fortnite from start-to-finish all by itself, without paying a platform royalty to anyone. What, then, is to prevent Epic from running regular offers for discounted V-Bucks on its own storefront, effectively moving more and more of the revenue from the game over to its own store, even though the game's success owes itself largely to being played on other companies' platforms?

Some of the solutions to this situation are pretty inelegant -- the most notable being the annoying and artificial division between V-Bucks purchased on PlayStation (and Switch) and those purchased on other platforms, meaning that V-Bucks purchased elsewhere don't appear in your account when you log in on PlayStation or Switch. This manages the double whammy of being seriously annoying to players and not actually solving the problem at hand: while the V-Bucks themselves may not be portable, any content or features which players buy with them on another platform will be usable no matter where they play.

In the face of this potential problem, the additional royalty Sony levies actually seems like a reasonably smart approach. It only kicks in when there's a major mismatch between how much of a game's revenue goes through PlayStation and how much of a game's playtime is on PlayStation. And contrary to the fuss being kicked up about it online, it only appears to apply to free-to-play titles (at least in the form whose details have been released thus far), since someone playing a non-F2P title on PlayStation has by definition paid their revenue share to Sony up front when they bought the game.

Sony and Epic's relatively good-natured wrangling to find a solution to this problem is, in many ways, a quite nuanced and interesting facet of the much larger discussion that's being provoked by the Epic / Apple legal battle. How much, if anything, is it reasonable for a platform holder to charge for running a business on their platform? What steps is it reasonable for them to take in defending that revenue?

Far from being evidence of some grand anti-consumer conspiracy, the deal Epic reached with Sony on the additional royalty is a welcome and timely demonstration that there can - when both parties are motivated to figure things out - be a more productive way of hashing out these issues than the legal posturing we've seen over the past week.

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